Labour reforms not essential for industrial growth: FM

Finance Minister Arun Jaitley has told Bharatiya Mazdoor Sangh that labour reforms are "not essential" for industrial growth and changes in these laws would be made only after taking unions on board, the RSS affiliated body said today.
"Jaitley conveyed to a delegation of BMS on the eve of the government completing two years in power (yesterday) that government has realised that labour reforms are not essential for industrial growth in the country," it said in a statement.
The statement assumes significance in view of the calls for extensive labour reforms to improve ease of doing business by doing away with the archaic laws.

Prime Minister Narendra Modi has also said in an interview to the Wall Street Journal that "labour reforms should not just mean (being) in the interest of industry" and they should also be in the interest of the labourer.
BMS delegation yesterday met Jaitley and other members of the ministerial panel on labour issues. Incidentally, the panel has not met the trade union after September 2 strike last year to deliberate on their 12 points charter of demands.
When contacted BMS General Secretary Virjesh Upadhyay told PTI: "We were meeting the Group of Ministers headed by Jaitley for a follow up of the 12 point charter of demands on labour issues raised by unions last year.

"He made the comment during a discussion on the labour law reforms, which is an issue in the charter of demands."

Besides Jaitley, Labour Minister Bandaru Dattatreya, Petroleum Minister Dharmendra Pradhan, Minister of State in PMO Jitendra Singh and Labour Secretary Shankar Agarwal were also present.
Power Minister Piyush Goyal was not present at the meeting.
The trade union delegation included General Secretary Virjesh Upadhyay, Former President Saji Narayanan CK, Zonal Organising Secretary Pawan Kumar and Deputy Finance Secretary Jagdish Joshi, the statement said.
"Jaitley said government will pursue any amendment on labour laws only after bringing unanimity among trade unions, employers' organisations and states. He also agreed that minimum wage has to be given a serious thought, considering the differences in consumer price in major cities and towns."

As per BMS, Jaitley has asked the Labour Minister to prepare a formula to work out minimum wage and extend social security to scheme workers.
Labour Minister was also asked by Jaitley to look into issue of contract workers to make their service condition at par with regular workmen.
"The Finance Minister said the government will instruct all states and central departments, to strictly implement the decision on enhancement of ceiling of Bonus," it said.
BMS insisted that the government has a relook at the economic policies to ensure better job creation and to strengthen state-owned companies which are the best model of decent wage to make economy run.

Jaitley said if cess is levied, states which benefit out
of GST roll out do not have to compensate the losing states.
"The Centre, as a non-beneficiary, has to compensate and the proposal for continuing existing cesses for five years to the extent of compensation required is the more benign way of compensating the losing states without burdening the tax payer," he said.
Jaitley said it has been proposed to the Council that there should be a 4-slab multi-rate tax structure with items constituting nearly 50 per cent of the weightage in the Consumer Price Index basket (mainly food items) being exempted from the levy.

"There will be a zero tax on such items. The object of this is to ensure that the GST structure is not regressive or burdensome on the common man," he said.
In the GST Council meeting last week, some states had expressed concern over the Centre's proposal to impose cess on demerit goods over and above the higher tax bracket of 26 per cent. A final decision on this is expected in the next meeting on November 3-4.
Jaitley further said that unlike developed countries, developing nations like India need more tax slabs as they have to take care of people below poverty line.

"The reality is that a multiple tax rate in India is inevitable for several reasons... The tax on some products in a narrow slab regime will substantially increase. This would be highly inflationary," he said.
A commodity being taxed by the Centre and states at 11 per cent at present will be taxed at 12 per cent. If its taxation is suddenly raised on standard rate of 18 per cent, it would disrupt the market and would be highly inflationary.
Jaitley said presently there are several items mainly used by the more affluent which are taxed at a VAT of 14.5 per cent and an excise of 12.5 per cent.

"If the cascading effect of these taxes and octroi is added, then range of taxation of these products is between 27-31 per cent. It has been proposed to the Council to fix the rate of these items at 26 per cent.
"Some of the items which are now being used by the lower middle classes will eventually be proposed to be shifted to the 18 per cent bracket. With regard to demerit and luxury goods which are taxed globally at a higher rate, no rebates are contemplated. Each good would be taxed on the basis of its own demerit," he added.